2 Tailwinds

Gold and silver now have 2 tailwinds at their backs and I’m not sure which one is more important. The first one is that the U.S. will again raise the debt ceiling and take on more debt. If you look at a chart of the price of gold and the debt ceiling, they are VERY correlated…until this last year. The price of gold in dollars are at the $1,700-$1,800 area which was priced very closely in accordance to our debt ceiling until 1,000’s of tons of paper gold magically hit the market. Now we know that the debt ceiling will be raised…but by how much? We haven’t been told that but I suppose it could be termed “unlimited” until they actually announce some number presumably leading up to the January extension fiasco. In fact, the Chinese were so impressed that “Dagong” (the Chinese equivalent of Fitch, Moody’s or S+P) downgraded the U.S. to an “A-” rating in response to our Congressional “success.”

The gold “very positive” event is the onset of capital controls announced yesterday by Chase bank. New information reveals that the $50,000 “limit” to withdrawals also will apply to large customers. I do want to point out that there are many “large customers” that have payrolls that exceed $50,000 per hour so limiting a company to this amount for a month is ridiculous…especially since it is supposed to be “the customers” money. These banks are basically saying that it is “our” money that we “owe” to you, “can you give us a little time to get it to you?” Depositors are now “back corner creditors” that will stand at the back of the line when the system comes down. This place in line was made a law when Dodd-Frank was passed. Other banks will surely follow this action leading up to the Nov. 17th deadline.

Please understand this, capital controls are ALWAYS used by governments leading up to “devaluation.” What is coming is a devaluation of the dollar but since it is the world’s reserve currency this will be seen as a “reset.” Whatever you want to call it our standard of living will decrease greatly and inflation will set in faster and stronger than any time in U.S. history. “Corralling” capital which is what these banks are doing makes it that much easier to vacuum up deposits and take wealth. They are making it harder in the final days leading up to the reset to “get out of the system.”

This has been done literally hundreds of times before, all for the same reasons and pretty much all with the same results. Looking back to ALL prior episodes of devaluation, gold is “bought” and bought very hard until it happens in panic fashion. This episode will be no different except the fact that it is not a “periphery” currency we are talking about. No, this is the big one because the dollar is the most widely used currency in the world AND acts as the “reserve” or foundation for the entire global banking and financial system.

As the debt pyramid which is upside down and standing on its tip collapses, “value” will accrue back into gold and away from debt and thus currency. What is coming will be seen as THE greatest transfer of wealth in the shortest period of time in an all of recorded history. Over the years, many years, gold which was always money lost “public status” and with it value leaked out and into debt and the underlying unbacked currencies…this will reverse in virtually overnight fashion. Understand that this is a “bell ringing” event(s). They are telling you that devaluation is coming. Do not wait and think “I will do something when I need to” because you need to NOW. I view the Nov. 17 deadline given by the banks with utmost respect. Purchase and have your metal delivered NOW, if it turns out that Nov. 17 is not an important date then what did you do? You bought gold and silver after years of suppression and at artificially low prices, you will be rewarded. The worst case scenario is if Nov. 17th does turn out to be the day that the trap doors of capital controls snap shut, life will change dramatically. I might add that all devaluations in the past that I am aware of were done over a weekend…Nov. 17 is a Sunday which is a pretty “odd day” for a bank(s) to change policy. Please do not ignore this warning because they will tell you later “we warned you ahead of time!”

6 Comments

Glen
on October 17, 2013 at 10:41 pm

I am happy that you are a cheer leader Mr Holter. Can you write a personal letter to my wife, who is latina who is wondering why I sent mucho dinero to the silver dudes and now my money is less than half what I sent? I am talking about Bullionvault. I am down much more than 50% of my originmal investment. I am a fool. Dont listen to most. I like you Bill Holter. Dont paint lipstick on a pig.

Bill Holter
on October 18, 2013 at 7:21 am

Sorry Glen, the “pig” as you call it is the financial system…and a rotten one at that. If you “are down way more than 50%” then you bought the absolute high tick. I have been a precious metals advocate since 1998 and have clients who own Silver from $4 and Gold from $260. They are not upset and are still accumulating. You either understand the current situation or you don’t. If you do then you continue buying, if you don’t and can’t stand the heat then you sell it all and get out of the kitchen.

John
on October 18, 2013 at 8:56 am

Bill,

What is the source for your mention of Citi?

Bill Holter
on October 18, 2013 at 12:07 pm

I read it on Alex Jones but deleted it from my piece as it was not confirmed. See my piece today regarding Forbes “explanation”.

Leo
on October 18, 2013 at 5:52 pm

Bill,
What happens when the capital doors are shut on the 17th? Will “devaluation” be a step function, like everything becomes 2x expensive?

Bill Holter
on October 18, 2013 at 5:56 pm

No one knows how exactly this will play out. It could go in “steps” or it could be 1 giant reset all at once. We don’t even know for sure that Nov. 17th means anything at all, it may or may not but it apparently means something to Chase…what exactly we will have to see.

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